What to know about Mitchell's city health care proposal

Thursday

Jan 11, 2018 at 11:30 AMJan 11, 2018 at 11:30 AM

By Michael Bonner mbonner@s-t.com

NEW BEDFORD — The first City Council meeting of 2018 will pick up the health care conversation.

Mayor Jon Mitchell requested approval of Chapter 32B, Sections 21-23 in order to lower tax increases to residents. What does that jargon mean and how could it potentially save taxpayers money? City Chief Financial Officer Ari Sky sat down with The Standard-Times recently to help explain it.

“I would consider it likely, that if this didn’t pass, that we would be taking a serious look at something operationally,” Sky said. “It would be elimination of positions. It would be cost reductions. I don’t want to use the L-word (layoffs) explicitly, but it would be reductions in service. It could be substantial.”

Union members also talked with S-T explaining why they believe the passage will hurt city employees.

"The co-pays, the deductibles, the annual deductibles — they’re skyrocketing, and it’s forcing a lot of individuals and families to make tough choices about getting the medical care they need and meeting other monthly expenses, said Jim Durkin, the legislative director AFSCME Council 93.

What does city employee health care have to do with residents’ taxes?

Since 2008, city employees’ health care costs have increased by about 78 percent, Sky said. The city pays for 75 percent of those costs, while employees make up 25 percent. The rise in health care costs last year alone rose 13 percent.

The cost increase is passed on to the taxpayer and the employee.

“This is what every employer everywhere is doing every year. They are tweaking and adjusting their plan to make sure the balance between revenue and benefits are logical and make sense,” Sky said. “Right now, it’s imbalanced. And that’s bad for the employees and bad for the city and bad for the taxpayers.”

What does Chapter 32B, Sections 21-23 do?

To answer this, Section 19 is important. It was passed in 2007 and allows municipalities to negotiate health care with a Public Employee Committee (PEC) rather than needing to do it individually with fire, police, teachers and AFSCME.

Section 19 benefited the city in one-stop plans but provided veto power to PEC regarding any changes.

“There’s no way for the employer to achieve cost savings and in fact there’s no incentive for the union to agree to cost-savings because it was outside of the contract,” Sky said.

Sections 21-23, if passed, would mean if the two sides can't come to an agreement after 30 days of negotiations, the decision would lie in front of a three-person review panel.

The panel’s role is to decide whether the city’s plan is favorable compared to the Group Insurance Commission’s standard. If it is, the plan must be accepted by the union.

What the unions think

Just as the city is disgruntled with the PEC’s veto power, union officials are concerned regarding the absolute power of the arbitrator that decides whether the plan is favorable to the GIC’s standard.

“I feel that the negotiations for employees health care should be handled at the table,” said Hank Turgeon, speaking on behalf of the police union. “The history of the PEC will show they’ve always negotiated in good faith with the city.”

Turgeon pointed to Mitchell’s own resume on the city’s website claiming to have “reigned in health care costs, all saving millions in taxpayer dollars.” Turgeon said the accomplishment shows the PEC has negotiated with the city in the past.

Tom Carreiro, the president of the New Bedford Fire Union, said the unions accepted Section 19 to allow the city to negotiate with the PEC rather than individual unions, but did so with the understanding their individual voices would continue to be heard.

"We understand that healthcare is a hot topic of discussion, from the dinner table all the way to the corner office in Washington DC," Carreiro said. "Healthcare is part of the package employees work under. It's negotiable."

Turgeon recognized the financial strain on the city, but didn’t believe city employees who are also residents of New Bedford should see cost increases in benefits and taxes.

Jim Durkin, the legislative director AFSCME Council 93, agreed.

“We believe and we have proven in places like the city of Boston that when you continue to negotiate health care through the traditional bargaining group that meaningful savings can be achieved and municipalities can provide workers with decent affordable health care coverage,” he said.

What the city thinks

The city wants to use Sections 21-23 to negotiate the cost of coverage such as co-pays, deductibles and prescriptions.

Currently, city employees pay $15 co-pays, which haven’t been increased since 2009. They also pay the same prescription rate for 30 and 90 day supplies, Sky said. There is also no hospital co-pay.

Sky said the city proposed an increase of co-pays to $25 as well as hospital co-pays and different prescription rates, which the union declined last year.

Sky said the proposed changes would have produced $1 million in savings per fiscal year and $2 million annually since fiscal years begin and end in July.

“People’s levy would have been less and employees premiums would have been less than they are now,” he said.

The city can’t touch the 75/25 split, through this process as stated by the language written by the state. Increased changes would be felt during visits to the physician, hospital and pharmacy. Premium costs could also increase, however, they wouldn’t be as high compared to the program without the city’s proposal.

“The message to the taxpayers is don’t ever think your taxes are going to go down. Because they’re not,” Sky said. “There’s no reduction in taxes coming. There could be more big increases coming if we don’t get these costs under control.”

Other options?

Sky dismissed other scenarios City Councilors have offered such as changing health care providers.

“Our plan is self-insured, which means we incur the costs and we pay the payout. It’s not like when you buy car insurance and your insurance company pays it out,” he said. “ It’s a self insured plan. All the health insurance company does is administer the plan."

Sky agreed with some city councilors who suggest generating more tax revenue to offset health care costs. However, he said a $1 million switch doesn’t exist to be flipped.

“It’s not going to happen. I think the (proposed) industrial park in the golf course at full build out is like $2-3 million a year and that’s at full build out,” Sky said. “My point is that’s substantial development.”

Sky is also concerned with the end of Staffing for Adequate Fire and Emergency Response (SAFER) grants. He said 21 fire personnel are employed under those grants. Next year that equates to about a $1.5 million addition to the budget.

"That’s going to be a big piece and that’s going to be coming in the general fund and there's nothing we can do about it. So what do you do? You’ve gotta cut somewhere.”

Follow Michael Bonner on Twitter @MikeBBonnerSCT.

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